Understanding the Laboratory Value Pyramid

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1 Understanding the Laboratory Value Pyramid as published as a 4-part series in The Dark Report (Sept. 22, 2014; Nov. 24, 2014; Feb. 17, 2015; March 30, 2015) Jim Ellis; BS, MS, MBA, MBB, (Retired Novartis & J&J) Managing Partner MME Consulting, LLC Aiken, SC jellisaiken@gmail.com 1

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5 Meet the Laboratory Value Pyramid What path can clinical labs follow to respond to healthcare s transformation? Introducing the concept of the Laboratory Value Pyramid. Provides lab leaders with a four-step road map from current state to ideal future state. Incorporates all concepts of modern business and quality management systems.

6 The Four Levels of the Lab Value Pyramid

Level 1: Achieve Normalcy & Predictability The goal of this four-level pyramid is to give the

team. Collaborators in this effort include a veteran lab industry executive and a team within a

22, 2014 the lab regularly engages subject matter experts (SME s) in lab process control and has

7 Level 1: Achieve Normalcy & Predictability The goal of this four-level pyramid is to give the strategic leaders of lab organizations a vision and an ideal that can be attained by their lab team. Collaborators in this effort include a veteran lab industry executive and a team within a major in vitro diagnostics company. The Dark Report, Sept. 22, 2014 the lab regularly engages subject matter experts (SME s) in lab process control and has these experts work with lab staff to identify and establish a core group of performance metrics unique to that lab s successful operation. 7

Level 2: Establish & Meet Standards of Value the key to level two is to put people, process and products

You will know your lab is competent at level two when the owners, directors, and C-suite executives

team nurtured the staff culture of continuous improvement and delivering more value to customers.

8 Level 2: Establish & Meet Standards of Value the key to level two is to put people, process and products together so as to achieve a best practice organization. You will know your lab is competent at level two when the owners, directors, and C-suite executives outside the lab want to know about the core competencies established by your lab, along with how your team nurtured the staff culture of continuous improvement and delivering more value to customers. The Dark Report, Nov. 24, 2014 these CTQ s are separate and measure the true heartbeat of the lab s daily operation. CTQ s 8 are to Value as Westgard Rules are to QC

9 Recent Results applying concepts from Level 1 & 2 into real lab case studies (lab employees + external SME s + major supplier) 9

Level 3: Deliver Value that Exceeds Expectations the key to level three is to shift from service

improvements in its informatics capabilities instead of being held hostage by IT, LIS, HIS, and

10 Level 3: Deliver Value that Exceeds Expectations the key to level three is to shift from service provider of lab results to a vital contributor in generating clinical value moving from volume to value. You will know your lab is competent at level 3 when your lab is proactive and is driving improvements in its informatics capabilities instead of being held hostage by IT, LIS, HIS, and middleware. The Dark Report, Feb. 17, 2015 lab has gained recognition as a core competency of its parent hospital or health system and is providing10 subject matter expertise in operations to other depts.

Level 4: Use Benchmarks to Achieve Best-in-Class the most significant differentiator

to analyze lab test results and clinical big data.

resemble and compare to the best labs in the US and world.

11 Level 4: Use Benchmarks to Achieve Best-in-Class the most significant differentiator of a level four lab is its sophisticated use of information technology, particularly to analyze lab test results and clinical big data. You will know your lab is competent at level four when you have the metrics that resemble and compare to the best labs in the US and world. The Dark Report, March 30, 2015.mastered the skills to raise the value and quality of lab testing services while reducing the cost of those services. 11

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13 Example of KPM s: 1 st pass yield, defect rate, sigma level, paid labor $ s per billable, etc. 13

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17 ACO s are Learning to use Big Data Dark Daily March 4, 2015 Pathologists and clinical laboratory managers could find opportunity to add value as providers learn to use big data to improve patient outcomes and lower costs Early adopter accountable care organizations (ACOs) are establishing data warehouses. This is a first step in collecting and analyzing healthcare big data. The move toward integrated care makes big data critical to an ACO s success. Pathologists and clinical laboratory managers will want to follow the healthcare big data trend because laboratory test results will be a major component of that data. The Goal of Healthcare Big Data The goal for healthcare big data is twofold: 1) develop the ability to aggregate a vast amount of data from wide-ranging sources, and 2) use that data in real time to improve care and lower costs, a recent story published in Modern Healthcare (MH) reported. New performance-based reimbursement models mean that big data analytics will be essential for ACOs to succeed going forward. 17

18 The Value of Big Data a pathway to Wisdom Level 4: WISDOM Level 3: KNOWLEDGE Level 2: INFORMATION Level 1: DATA 18

19 Big House Big House of US 6 Sigma Quality Healthcare Delivery at Substantially Lower Cost US Labs pathway to getting to the Big House is to develop & execute a strategy to contribute Big Data A C O A F F \ C A R E T B D B I G D A T A The systematic progressive steps from Level 1 through Level 4 of the Lab Pyramid of Value allows a Lab to get to the Big House by contributing Big Data*. *Examples of what Big Data is and examples of those early adopter labs demonstrating success at all levels of the pyramid and contributing Big Data can be found in back issues of the Dark Daily, The Dark Report, Clin Lab News, and Executive War College and Lab Quality Confab agenda content. Level 4: Use Benchmarks to Achieve Best-in-Class Level 3: Deliver Value that Exceeds Expectations Level 2: Establish & Meet Standards of Value Level 1: Achieve Normalcy & Predictability Numerous US Labs today are struggling with what to do & how to get where the market is demanding them to go. Lab Pyramid of Value Creation

20 Understanding the Laboratory Value Pyramid as published as a 4-part series in The Dark Report (Sept. 22, 2014; Nov. 24, 2014; Feb. 17, 2015; March 30, 2015) Jim Ellis; BS, MS, MBA, MBB, (Retired Novartis & J&J) Managing Partner MME Consulting, LLC Aiken, SC jellisaiken@gmail.com 20

21 Level four: Use Benchmarks to Achieve Best-in-Class Your lab s practices and competencies are recognized as best-in-class by your peer groups and third party reviewers. You are consulting with other hospitals and systems to help them replicate what you have done within your institution. Your lab is recognized as among the best in the business because of how your lab team uses all the attributes from the first three levels. Examples of world-class labs can be found within prestigious institutions like Mayo, Stanford, Vanderbilt, MGH, Cleveland Clinic. Extra credit! Your lab has created the database structure that allows it to mine the value of lab test data.

USING THE LABORATORY VALUE PYRAMID (LVP) TO BECOME A RECOGNIZED BEST-IN-CLASS LAB

USING THE LABORATORY VALUE PYRAMID (LVP) TO BECOME A RECOGNIZED BEST-IN-CLASS LAB JIM ELLIS, BS, MS, MBA, BB, MBB MANAGING PARTNER MME CONSULTING, LLC (RETIRED CIBA CORNING & ORTHO CLINICAL DIAGNOSTICS)